News: GNC UPDATE 2-GrainCorp shares dive after ADM cancels stake sale

(Recasts with sources, details on attempted sale stake and context on Australian grain industry)

Shares in GrainCorp (GNC) fell as much 7 percent on Wednesday after its largest shareholder, Archer Daniels Midland Co , failed to find a buyer to sell its 20 percent stake in Australia's largest listed bulk grain hander.

ADM was shopping its stake in GrainCorp, but after muted interest the U.S. agribusiness giant cancelled the sale process, two sources familiar with the matter said.

Lazard was advising on the sale, but a buyer could not be found for the entire stake and interested parties were only keen to buy at around A$8 ($6.00) per share, the sources said.

One of the sources, who spoke on condition of anonymity, said after being contacted about a possible sale, while there could have been upside, there was also a risk "we could have lost millions" if the deal went wrong.

Shares in GrainCorp last traded at A$8.12 by 0535 GMT, down around 6 percent.

An ADM spokesperson did not confirm the attempted sale but said: "We regularly review our business portfolio and consider a wide range of strategic opportunities to determine how best to maximize shareholder returns. There can be no assurance these discussions will result in a transaction."

GrainCorp Chief Executive Mark Palmquist was quoted by the Australia Broadcasting Corporation as saying he had not spoken to ADM about its plans and did not want to speculate.

ADM's attempt to sell out of GrainCorp comes nearly three years after its A$2.8 billion bid was rejected by Australia's government, citing national interest concerns.

GrainCorp has been hit by prolonged drought in parts of Australia's east coast, curbing grain production and revenues for storing gain on behalf of farmers and from trading.

The bulk grain handler in May said underlying net profit for the first half was A$32 million, down from A$35 million a year earlier and with full-year forecasts of A$40 million-A$55 million.

Should profit come in at the bottom end of the forecast, it would be GrainCorp's lowest earnings since 2008.

Australia is the world's fourth-largest exporter of wheat, but after three years of dry weather the country's competitiveness in the global market has waned.

Australia's chief commodity forecaster last month raised its forecast for wheat production in the 2016/17 season to a four-year high of 25.4 million tonnes.

But with plentiful global supplies, Australian wheat exporters are losing market share to cheaper sellers, particularly from the Black Sea region. ($1 = 1.3323 Australian dollars)